HE+ANS+to+HW5+-+Spring+2010 - Department of Economics...

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Department of Economics Prof. Derek DeLia Health Economics 220:316:01 Spring 2010 ANSWERS TO HOMEWORK #5 QUESTION 1 : a. W=733.33, L=126.67 b. W=300, L=140 c. Workers gain an additional 66.67 per unit of labor. Employers gain 133.33 per unit of labor. Notice that the total gain per unit of labor is 200, which is the difference between the value workers gain from insurance and the amount employers have to pay for it. d. Total worker surplus gained = $8,889. Total employer surplus gained = $17,778. e. The new equilibrium is W=166.67, L=113.33. Workers lose 66.67 per unit of labor, while employers lose 133.33 per unit of labor. Total worker surplus lost = $8,000. Total employer surplus lost = $16,000. QUESTION 2 : a. Since older men are likely to benefit from the mandate, their wages would likely adjust downward. Other workers would see little change in their wages. (I will discuss the graph during the review session.) b. Analysis of mandated maternity benefits found that the new benefit was paid for by lower wages paid to women ages 20-40 – i.e., those most likely to benefit from the newly provided insurance benefit. QUESTION 3 : a. People at high-risk of being uninsured include the poor, low-income, unemployed, racial and ethnic minorities, and immigrants (especially non-citizen immigrants). b. Although there is disproportionate representation of the population groups listed in part a, most uninsured residents are not poor, in families with at least one worker, and are American-born citizens. QUESTION 4
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This note was uploaded on 05/05/2010 for the course ECON 316 taught by Professor Delia during the Spring '10 term at Rutgers.

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HE+ANS+to+HW5+-+Spring+2010 - Department of Economics...

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